Why You May Not Need a Term Insurance Plan Beyond Your Working Years?

It’s a Sunday brunch, and you’re sipping coffee with friends when someone says, “I just renewed my term insurance plan till age 80.” Everyone nods approvingly until someone asks, “But… do we really need it till then?”

That’s the moment the room goes silent. Because while buying a term insurance plan feels like the responsible thing to do, not many pause to consider how long they actually need one.

Sure, we all understand what term insurance is—a pure protection plan that pays a lump sum to your family if something happens to you. But what most of us miss is that this is meant to replace your income, not to create an inheritance or serve as a retirement backup.

Let’s explore why holding onto a term insurance plan well past your working years might not be the smartest financial decision.

Why Do People Buy Term Insurance in the First Place?

Let’s begin with the basics: What is term insurance?

Term insurance is designed to provide financial protection for a specific period, usually your working years. If the policyholder passes away during the policy term, the nominee receives a death benefit.

The key point is this: Term insurance is meant to replace your income, which supports your dependents. So, if you’re no longer earning or if your family is no longer financially dependent on you, the core purpose of the policy is already fulfilled.

Common Misconceptions About Continuing Term Insurance After Retirement

Many people continue with their term insurance plan well after they retire, often based on misconceptions or societal pressures. Let’s take a closer look at the two most common reasons for this.

1. “It’s my last gift to my family.”

While the sentiment is noble, after a certain age, if your family is financially secure, the need for a term insurance plan reduces drastically. Consider other instruments like retirement savings or estate planning tools if legacy creation is your goal.

2. “Everyone else is doing it.”

Buying or continuing an insurance plan just because others are doing it is a flawed approach. Your financial situation, responsibilities, and goals are unique.

If you’re financially independent with no significant liabilities or dependents, you likely don’t need term insurance into your 70s or 80s.

How Long Should You Keep Your Term Insurance?

The ideal answer: Only until you have dependents or major financial liabilities.

Example: Individual A vs. Individual B

Individual A, 45, has a housing loan, children to support, and a non-working spouse. He buys a term insurance plan until age 65 to cover these risks.
Individual B, also 45, has cleared his loans, his children are financially independent, and his spouse has her own income. He doesn’t opt for term insurance.

In both cases, the decision is based on need, not social pressure.

The Problem with Delaying a Purchase or Extending the Term

Buying a term insurance plan at a younger age is cost-effective. However, extending coverage into your 60s or 70s can get expensive.

Insurance companies charge higher premiums as you age due to increased health risks. In fact, a 45-year-old male non-smoker who delays buying a term insurance plan for five years may see premiums rise by 40%.

Moreover, if you develop health issues like diabetes, you may either face higher premiums or be rejected altogether.

The Tax Angle: Should You Keep Term Insurance Just for Tax Benefits?

Some people buy term insurance solely for the Section 80C tax deduction.

For instance, an individual may purchase a term insurance plan for ₹1 Crore to save ₹23,400 in taxes. However, if the premium is ₹36,000 annually due to age or health issues, they are effectively spending ₹12,600 more than they saved.

Tax-saving investments like ELSS or PPF can provide wealth creation benefits along with tax savings. Term insurance should primarily be bought to protect your loved ones, not just to save taxes.

Note: Tax benefits are based on the prevailing tax laws, which may change occasionally.

When Should You Consider a Term Plan After Retirement?

There are exceptions:

If you have outstanding liabilities (like a long-term loan).
If your spouse or dependents still need financial support.
If you’re self-employed and plan to work well into your 60s.

In these cases, a term insurance plan until 65 might make sense, but not necessarily beyond.

What Should You Do Instead?

Instead of locking yourself into a term insurance plan later in life, consider these options:

Focus on retirement savings early on.
Create emergency funds.
Explore health insurance and critical illness coverage, which are more relevant post-retirement.
Use mutual funds or fixed deposits to create wealth for dependents.

Aviva Signature 3D Term Plan – Platinum: Secure Your Family’s Future

The Aviva Signature 3D Term Plan – Platinum provides comprehensive protection with a Preventive Wellness Package for your health, while safeguarding your legacy and shielding against financial uncertainties. Choose from two flexible options:

Life Protect: Offers consistent coverage with optional riders like Accidental Casualty, Critical Illness, and Cancer Care.
Credit Protect: Ensures loan repayment protection with a reducing sum assured.
Additional benefits include special premium rates for women and non-tobacco users, coverage up to age 80, flexible payment modes, and a 30-day review period, making it an ideal plan for modern families.

Conclusion: Choose Wisely, Choose Smart

A term insurance plan is not a trophy to display. It’s a shield meant to protect your loved ones during the income-earning years of your life.

By the time you retire, your focus should shift from income replacement to income generation and preservation.

So, before you rush to extend your term insurance plan to 80, ask yourself: “Do I still need it?”

Financial maturity is about owning what you need, not every product on the market.

If you need help choosing the right term insurance duration or coverage, consult a trusted insurance partner to ensure your plan protects what truly matters at the right time.